of his business, so as to be able to determine what increase would be right, then I do not think he should have come here at all. If he was not willing to give the committee the benefit of his knowledge and information upon the subject, in my judgment he should have kept away from here. But to come here and say that one proposition is not enough, and then to refuse to give the reason why in his judgment it is not enough, is not fair. Then, Mr. Shreve broke in and questioned Mr. Hight, as follows: Mr. SHREVE. Would you mind telling me what is the net income that your company makes on your investment? Mr. HIGHT. Do you expect that I would answer any such question to you as that? There, again, he is declining. There is another witness testifying here; let me see who he is. Mr. Shreve in his testimony files-which becomes a part of the recorda bill which somebody else has proposed. I think one of the attorneys for the Post Office Department proposed it. I am not quite certain about that. Section 10 reads: That any person violating any of the provisions of this act shall be deemed guilty of a misdemeanor and shall be punished by a fine of not exceeding $500 There he wants to reduce the fine to $500, instead of $1,000, if the fine is to be used at all; and a fine of $1,000 would not stop profiteering Senator POMERENE. No; that is the maximum. Representative JOHNSON. Well, that is reducing the size of the fine. [Continuing reading:] for each offense, which said fine shall be fined and assessed by the rent administrator or, on appeal, by the board of rent appeals, and shall be collectible by the rent administrator in a suit to be brought in the name of the United States in either the Supreme Court or the Municipal Court of the District of Columbia, without regard to the amount involved. That is a new and entirely novel manner of collecting fines. I find on page 95, still in the testimony of Mr. Shreve, the following language used: I forget, now, which members of the committee were in favor of certain propositions, but we thought a net income of 7 or 8 per cent on real estate was proper. It had theretofore been admitted that a net income of 4 per cent had been deemed sufficient in a number of parts of the country. I think that was brought out by Senator Hollis. Seven or eight per cent would simply mean a doubling of the rent. And here I find a little note which turns my mind to another thing, and that is that the various citizens' associations and the Chamber of Commerce and the Board of Trade have unanimously, in most instances, adopted resolutions opposing what is known as the Johnson bill. If you go into the subject you will find that the Real Estate Dealers' Association and the Chamber of Commerce and the Board of Trade and the citizens' associations, with but few exceptions, are all one and the same thing-made up of the same people. In most instances the principal officers who are the dominating spirit in the citizens' associations are the real estate men who live in the locality, so that the protest comes from one and the same source all the time. Mr. James H. Gore testified as a retired professor of mathematics. Well, he admits that profiteering is going on here. Senator POMERENE. I think everyone concedes that there has been profiteering, and it is only a question as to the amount. Representative JOHNSON. Yes; but Mr. Gore also took the position, as an expert mathematician, that profiteering should not be stopped here unless it was stopped elsewhere. That needs no answer. Prof. Gore, in his remarks, further said: I bought a very valuable piece of property that was under lease, and it had been leased by the owner to a personal friend at a mere nominal price. I expected to either sell the property or relet it at the termination of the lease, which will occur now very soon; and if this law goes into effect, I will not be able to increase the rent to anything like what it should be and to what I expected it would be. That shows that he, too, testified from the standpoint of a landlord and not entirely or exclusively from the standpoint of "an expert mathematician." Senator DILLINGHAM. Take another case of a similar character. A very fine-appearing cultivated southern woman came to me the other day, saying that her father was in poor health in 1916, and she was also; that they were in low circumstances; and that at that time it was very difficult to find tenants. For this reason they rented their finest room on the second floor of their house for $16-well worth $30 in any ordinary time. At the present time she is renting the same room at a price which I considered very reasonable, but it is nearly double what she was getting in 1916. She says, "If this bill passes, I shall be unable to secure for myself a fair rental of the premises." That is a similar case to Prof. Gore's, except that she was poor and he was not. Representative JOHNSON. Was she a landlord or a tenant? Senator DILLINGHAM. She was a landlord; the owner of the house; now a widow. Representative JOHNSON. And was she admitting that she was throwing open her doors? Senator DILLINGHAM. She has opened them now to some Army officers, and they were paying what she and they considered, and I considered, a very fair rental, although it was nearly double what she was compelled to take back in 1916. Representative JOHNSON. Well, if I am called upon to give an answer to the question Senator DILLINGHAM. I do not put it as a question, but I am simply calling it to your attention as a similar case to the one you mentioned, except that the owner did not happen to be a widow. Representative JOHNSON. Well, I would say that if she was getting double what she could have gotten in 1916, she was getting too much, notwithstanding Senator DILLINGHAM. She was poor, and her renters in 1916 were poor; she took them in partly from kindness and partly because she wanted what little money she could get to help to pay the taxes. Representative JOHNSON. If it came to a question of housing somebody who was not able to pay the double charge, if I could I would interfere with it in the fullest way possible; but where there are exceptional cases, if you can write into a bill an exception that will protect them, I shall be glad indeed to cooperate with you in its passage. Prof. Gore also says, on page 104, that the legislation should be along the lines of a criminal statute and not taxation legislation. I can not understand why a landlord should insist that he should be made a criminal instead of being a mere taxpayer, unless it is for his financial betterment. To have insufficient fines imposed is what the landlord here really desires, instead of having the income-tax provision applied to him. On page 105 Mr. Linkins says: The very pendency of this legislation has practically stopped all profiteering in rents in the District of Columbia. Now, if the pendency of the bill will stop it temporarily the passage of the bill will stop it permanently. The following statement was made by Mr. Downs, speaking for the Hotel Washington, to which I have already referred: According to the Now, you take our place, with a probable cost of $3,000,000. The figure "9" is inadvertently put in there. He means $2,000,000, which would be two-thirds of what he says is the cost, $3,000,000. (Continuing reading:) and only be allowed a gross income from our rooms of about $200,000. The bill does not make any provision at all about the valuation for the purposes of this bill at two-thirds value, but at full value; so that there is his income would be $100,000 more than he figures on. There was one insertion made that I wanted to invite the attention of the committee to, and perhaps somebody can help me find it. It was where an attorney who refused a loan to scmebody who wanted it. Mr. WARDMAN. That was in the testimony of Mr. Giesy. Mr. WARNER. That is on page 142 of the record. Representative JOHNSON. That paper to which I have just referred was put into the record by Mr. Giesy for the purpose of showing that if any legislation of this sort should be enacted into law they would not be able to get loans on their property. The statement reads as follows: Mr. S. HERBERT GIESY, Washington, D. C. BALTIMORE, MD., March 18, 1918. DEAR SIR: I am sorry that absence from my office should have prevented my sooner acknowledging your letters of the 12th and 14th instant. The legislation pending in Congress in reference to rents will, I fear, render it difficult for me to place loans on improved property in the District of Columbia. The note on the Alexandria property you mention looks attractive, and it might be worth while to let me know the particulars, although I am not usually able to place paper except when secured by deeds in which I am trustee. Very truly, yours, J. S. T. WATERS, Attorney and Counselor at Law. There it appears that the real reason for not making the loan was because Mr. Waters was not to be trustee. Mr. Baldwin, I believe, is the only witness who appeared that was not in the landlord class. He stated that he lived in New York and maintained a voting residence there, but that he spent practically all of his time here. He answered as follows to a question of Senator Hollis: Senator HOLLIS. What has been your business in the District of Columbia? Mr. BALDWIN. Nothing. I say that he is the only witness that I have noticed in my somewhat close reading of the testimony taken who is not of the landlord class. Mr. Baldwin is, I understand, a rich man, but I do not know whether he is or not. I have heard so. That is not against him. I understand that he is quite a public-spirited man and that he is taking an active part in all civic matters pertaining to the District of Columbia; in fact, he says so himself. But I can not always find myself able to agree with him in his opinions about things. When we had up the loan-shark bill, and since, Mr. Baldwin has advocated a high rate of interest. He is advocating it now, if I am correctly advised that the rate of interest of 12 per cent a year that may be charged by pawnbrokers and other lenders of small amounts should be made 2 per cent a month, which would make 24 per cent a year. Senator DILLINGHAM. I am inclined to think you are mistaken about that. Representative JOHNSON. I was about to say that I feel absolutely certain in my own mind that I am correct about it, and I have in mind the hearings that we had before the House committee. Senator DILLINGHAM. We will not take up any time to discuss that. You will admit that Mr. Baldwin has been a man active in civic affairs? Representative JOHNSON. Yes, active. Senator DILLINGHAM. And that he was trying to break up the loan shark business here? Representative JOHNSON. He was trying to break it up by allowing them to charge 24 per cent interest instead of 36 per cent a year, while I was undertaking to limit it to 12 per cent, and I do not believe that 24 per cent can be paid by any man and live; and if you will allow me, I will cite a little instance Senator DILLINGHAM. I do not care to take up the time of the committee and encumber the record with that matter. I will withdraw anything I said, and let you criticise him all you care to. Representative JOHNSON. But I was going to say in regard to Mr. Baldwin that there are some public spirited men in town, like he is, and some most excellent women, who have been looking into rent matters in the District of Columbia to some extent-to a very considerable extent and through their help, I believe, a little financial organization with a capital stock of $23,000, was put together, principally by some moneyed men of the town, for the purpose of securing good housing and reasonable rents for wage earners. They have been active in that movement, and in a hearing before the House District Committee on the subject it was shown that $23,000, through the efforts of these good people, had been run up to a quarter of a million dollars and the housing they have been furnishing was on a basis of about 14 or 15 or 16 per cent on the investment, whereas the tenants could get comfortable houses on the 10 per cent plan. Senator DILLINGHAM. Was Mr. Baldwin in that? Representative JOHNSON. I said, and if I did not make it clear I intended to do so, when you interrupted my remarks, that I was not absolutely certain that he was interested in it; but I feel reasonably certain that he was. It would not be just the thing for me to do, to call the names of some most good women who are also interested, but I have insisted the one who has been most prominent in it that she has been misused in her activities. I do not believe she has been as active in it during the last two or three years as she had been before. I mentioned Mr. Baldwin just because he had testified, and because he is not in the landlord class, but that he was a man taking great interest in civic affairs, and that I disagreed with him in some of his views, and that I disagree with him in his views upon this bill. There is one thing that Mr. Wardman said that I think ought not to go unnoticed. On page 147 of the record he says: I am building at Woodley, and I believe it will cost me close onto half a million dollars more than it would have done two years ago, and I will say it was something that I had not thought about when I started to build, and if I had thought I probably would not have started, but that extra half million has got to be raised somewhere. The comment I wish to make upon that is that if Mr. Wardman is putting $500,000 more into a house than he contemplated putting into it, that the provisions of the bill would allow him 10 per cent on that half million dollars. In speaking of the Gen. Black matter, Mr. Fairfax, I believe it was-if I misquote or get the subject in the wrong name I wish to be corrected-testified as follows: Of course, you will find in your investigation that some of these cases of profiteering and when you begin to analyze them you will find that it is simply awkwardness on the part of the agent or landlord in trying to regain possession of his property. The only comment I have to make upon that is that all of that "awkwardness" has resulted in expense to the tenant. Senator POMERENE. In fixing the amount of increase in gross rentals of 10 per cent provided for in your bill, did you take into consideration the fact that there was an increase in material and wages which might be necessary in keeping up repairs, or in the maintenance or the operation of these buildings? Representative JOHNSON. I did. Senator POMERENE. What increase in wages, in your judgment, is there in the District; what increase has been made in wages during the last year? Representative JOHNSON. I would say from 60 to 75 per cent. Now, understand me, that I can not fix Senator POMERENE. Oh, yes; I understand that thoroughly; 60 to 75 per cent? Representative JOHNSON. I am guessing at it. Senator POMERENE. I suspect from what I have heard here that you are not very far from right in your statement. What increase do you say has been made in the cost of material? Representative JOHNSON. That would go into repairs on a house? Senator POMERENE. Yes; that would go into repairs-papering and carpentering and plumbing Representative JOHNSON. You are speaking now of material alone? Senator POMERENE. Yes; I am speaking of material. |